Opponents of civil justice reform argue that reform creates little, if any, benefit for consumers. A Citizens for a Sound Economy study indicates several positive and direct consumer benefits attributable to civil justice reform. Specifically, the civil justice reforms passed in Texas created nearly 200,000 jobs while providing savings to the typical Texas household of $1,078 through lower prices and increased total personal income.
In the last twenty years many states have enacted liability (or “tort”) reform laws to eliminate undue costs and delays in the civil justice system caused by excessive and uncertain liability. Proponents of such legislation have argued that reforms are needed because the current legal system in many states stifles innovation, keeps beneficial products off the market, and undermines the ability of U.S. businesses to compete in the global economy. Liability reform legislation can help solve these problems and benefit society as a whole. Such laws also can benefit consumers directly by reducing the “tort tax” they pay in the purchase of goods and services. Opponents of reform argue that evidence of a lawsuit abuse problem is anecdotal, and that reforming the legal system primarily serves the interests of large corporate defendants.
The reforms generated savings to the typical Texas household of ,078 through lower prices and increased total personal income.
During the 1995 Texas tort reform debate, the Dallas Morning News summarized the positions of both sides: “Corporate executive Robert McNair insists he won’t build a new $15 million headquarters in Houston without [tort reform]. Attorney Mike Slack calls it a phony issue trumped up by Austin lobbyists to assure themselves jobs. And academician Michael J. Saks says the fact that people get so riled up about it shows how little anyone knows about it.”
In order to determine what, if any, benefits accrue to consumers as a result of tort reform, Citizens for a Sound Economy commissioned former professor at Baylor University and Southern Methodist University, Dr. Raymond Perryman, to conduct an econometric study of the bipartisan civil justice reforms passed by the Texas legislature and signed by Gov. George W. Bush in 1995.
The results of Dr. Perryman’s study indicate several positive and direct consumer benefits attributable to civil justice reform. Specifically, Dr. Perryman found that the 1995 Texas tort reform laws created nearly 200,000 new jobs in the state. The reforms also generated savings to the typical Texas household of $1,078 through lower prices and increased total personal income. Dr. Perryman’s findings establish that the 1995 Texas civil justice reform legislation has been a success, and has improved the lives of ordinary Texans.
Citizens for a Sound Economy
Issue Analysis 108:
The Consumer Benefits of Civil Justice Reform in Texas
(PDF format, 11 p. 91 Kb)